South Korea's Samsung Electronics is open to forging an alliance with Japan's troubled Olympus Corp, potentially joining other electronics firms in circling one of the world's biggest names in medical equipment, sources said.
Samsung's major Japanese rivals, Sony and Panasonic, have already shown interest in Olympus, now in need of capital after being swamped by a $1.7 billion accounting scandal over the past three months, sources in Tokyo have told Reuters.
Olympus is best known for cameras, but makes most of its money in healthcare, dominating the market for gastro-intestinal endoscopes which are seen as the kind of high-tech, profitable and stable business that electronics firms would covet.
Samsung has ruled out any interest in Olympus' loss-making camera business, but a company source said on Thursday that it might consider an alliance with Olympus in other areas.
We are open to the possibility of an alliance with Olympus, the source with knowledge of the matter said on condition of anonymity, without elaborating.
Earlier, the Asahi Shimbun newspaper reported that Olympus was scouting out the electronics industry for a friendly investor to take a minority stake in the company, and that Olympus had drawn up a short-list of five potential partners.
The daily, quoting unnamed sources, listed them as Samsung, Sony, Panasonic, Japanese medical-equipment firm Terumo Corp, which already has a small stake in Olympus, and endoscope rival Fujifilm Holdings.
Olympus turned almost overnight from a venerable blue chip to an investor's nightmare in October, when it fired its British chief executive, Michael Woodford, who then went public with his concerns about the firm's dubious book-keeping.
It has since lost about 40 percent of its share price - though it has recovered from an 80 percent sell-off at one stage - and its management is in disgrace after the firm was found to have hidden losses from investors for 13 years.
Its plight is a potential opportunity for the electronics industry, which has been pushing into healthcare.
A Samsung Electronics spokeswoman said on Thursday it had not received a detailed offer from Olympus regarding a tie-up.
Samsung has targeted healthcare for growth as it diversifies away from businesses where it commands leading positions such as electric components, mobile phones and TVs. It has said it will aggressively pursue investments and acquisitions in new areas such as healthcare and renewable energy.
In November, it bought U.S. cardiac-testing firm Nexus, its second healthcare acquisition last year.
OLYMPUS LOOKS TO RAISE UP TO $1.3 BILLION: ASAHI
The Asahi said Olympus planned to decide on a tie-up as soon as next month and was looking to raise up to about 100 billion yen ($1.3 billion) in new equity, although it was unclear if either Olympus or its major owners were in talks with any of the short-listed five.
Olympus, responding to the Asahi report, said only that it was considering various reform options and nothing was decided.
Sony, Panasonic and Fujifilm have already been examining the scope and timing of a possible equity stake in Olympus, sources familiar with the matter have said. All three firms are keen on the lucrative medical equipment sector.
Any Olympus-Fujifilm deal, however, would face tough scrutiny from Japan's anti-monopoly watchdog given the two would have a combined market share of more than 80 percent in flexible diagnostic endoscopes, used to look inside patients to check for intestinal cancers and other diseases.
The Asahi report sent shares in Olympus climbing as much as 6 percent, recovering further from the depths of a crisis. The stock closed up 3.25 percent at 1,270 yen, valuing Olympus at around $4.35 billion.
Sony, Fujifilm and Terumo declined comment on Thursday, though Sony boss Howard Stringer had said this week the Olympus situation was still evolving and he could not comment.
That situation isn't far enough along for me to comment on, he told reporters at the Consumer Electronics Show in Las Vegas.
We have a relationship with Olympus, have had a relationship because we make components for Olympus. We haven't marched forward in that particular area. It's a little confusing...
A Panasonic official said on Thursday: We are not considering a capital tie-up at this point.
Panasonic's comment has failed to extinguish talk in Japan that it might yet take a stake in Olympus, once the disgraced firm has finally put the accounting scandal behind it.
Panasonic President Fumio Ohtsubo, also speaking at the Las Vegas event earlier this week, had said: The situation is unclear, so we aren't doing anything at this time.
Having recently restated its accounts, Olympus is left highly geared and in need of fresh capital. It remains under investigation by police, prosecutors and regulators.
It is also in the extraordinary position of being run by a board of directors of whom more than half are being sued by Olympus for mismanagement. The current board, however, plans to resign and usher in a new board by March or April.
(Additional reporting by Chikafumi Hodo, Isabel Reynolds and Nathan Layne in TOKYO, and Miyoung Kim and Timothy Kelly in LAS VEGAS; Writing by Mark Bendeich; Editing by Joseph Radford and Ian Geoghegan)